5 Types of Business Insurance Every Entrepreneur Needs
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Contents
Introduction
Every entrepreneur needs a business insurance policy that’s tailored to their company. There are many different types of coverage you can choose from, but they each have their own unique benefits and risks. Here are five types of insurance every business owner needs:
Workers’ compensation insurance.
If your business employs people, workers’ compensation insurance is a must. It covers medical expenses and lost wages for employees injured on the job. The cost of providing this coverage can vary widely depending on your state’s laws, but many small businesses can get workers’ comp insurance from their state government.
In most states, if you don’t have coverage in place at all times–or if you have gaps in coverage–you could face severe penalties or even be shut down entirely by state regulators (depending on how serious an infraction it is).
Commercial liability insurance.
Commercial liability insurance covers your business against claims of negligence. This can include bodily injury, property damage and personal injury. It’s important to have this type of insurance if you are a small business owner because it protects against lawsuits that may arise from accidents at work or in the office.
If someone is hurt on your premises or due to something that happened while they were there, then commercial liability coverage will help cover their medical bills during recovery time as well as any other costs associated with their injuries such as lost wages due to missing work time because of those injuries (which could be quite substantial if someone has been seriously injured).
Property insurance.
Property insurance covers your business’s property. This can include:
- The building that houses your office and equipment, including computers and other electronic devices.
- Inventory (the goods you keep on hand to sell).
- Machinery and tools used in production or service delivery, such as manufacturing equipment or vehicles used for deliveries.
Automobile liability insurance.
- Auto liability insurance. This type of insurance protects you and your business from the cost of injuries and property damage caused by your vehicle. You can choose different types of coverage for your auto insurance policy, such as collision, comprehensive and medical payments.
- Workers’ compensation coverage. If you hire employees to work for your company, it’s required by law that they have workers’ compensation protection in case they get injured on the job or contract a disease while working at your place of business (like chicken pox).
Umbrella coverage.
Umbrella coverage is an additional layer of protection that can be used to cover losses that exceed the limits of your other insurance policies. It’s a good idea if you have a lot of assets that could potentially be damaged or destroyed, such as a home and its contents, vehicles, jewelry and artwork. Umbrella insurance also helps protect you from legal fees if someone sues you for personal injury or property damage.
If you’re self-employed with little or no savings–and especially if your business has been in operation for some time–you may want to consider purchasing umbrella insurance from one of the many carriers out there who offer this type of policy (they’ll need proof that there isn’t any coverage available through other policies).
Businesses need to have specific insurance policies for each type of risk their business faces
For example, if you run an online e-commerce store, you’ll want to get both general liability and product liability policies. If your business sells food products or rents out space in its office building, making sure that it has sufficient coverage against bodily injury and property damage is essential.
Businesses also need to purchase different types of insurance based on where they operate their business–for example, if you’re opening up shop in New York City or Los Angeles (or anywhere else where earthquakes are common), earthquake insurance may be necessary; while businesses located near bodies of water might require flood protection as well as flood hazard disclosure forms so customers know what kind of risks they face when visiting the establishment.
Conclusion
Business insurance is a crucial part of running a business, but it can be difficult to understand. The types of insurance listed above are some of the most common ones that entrepreneurs need. If you have any questions about these policies or others related to your business, talk to an expert who can help guide you through the process.
